Viet Nam Engine And Agricultural Machinery Corp. – Outperform (VEA : UPCoM – Industrial Engineering)

Viet Nam Engine And Agricultural Machinery Corp. – Outperform (VEA : UPCoM – Industrial Engineering)

 

  • HSC’s final guidance suggests that FY2018 sales came to VND 7,220 billion (+10.0% y/y) for a NPAMI of VND 6,303 billion (+24.9% y/y).

 

  • FY2018 marks the most successful year ever for Honda in Vietnam market with 16.4% surge in NPAT while Toyota had a nice rebound with 25.1% recovery in the NPAT after a shaky year in FY2017.

 

  • For FY2019, HSC forecasts net sales of VND 7,580 billion, (+5.0% y/y) and NPATMI of VND 7,083 billion, (+12.4% y/y).

 

  • Assuming no change in the OS and with a 1% bonus and welfare fund allocation, FY2019 EPS then could come to VND 5,277 and translating into a forward P/E of 7.9 times.

 

  • Honda Vietnam currently is the main earnings driver for VEA and motorbikes will be the main driver for the time being.

 

  • In addition, Vietnamese automobile market sets for big growth in the longer run, with huge opportunities to promote the automobile industry.

 

  • Valuations look reasonable at forward P/E of 7.9 times coupling with a decent dividend yield up to 9.2%

 

  • Government have plan to reduce their stake in VEA further soon.

 

  • Meanwhile, VEAM is also preparing some paperwork to list their shares on the HSX in FY2019.

 

  • Our fair value for VEA is VND 44,852 and offering a 8.1% potential upside from the current price.

 

  • We rate Outperform on this stock.

 

  

We thank you for being our client,

 

 

HSC

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